The Original Rationale For DTS Was Valid: A Streamlined, Cost-Effective Way For The Department Of Defense To Purchase And Mana

FY07 Defense Appropriation

Backgrounder: Chocola Amendment

The Department of Defense (DOD) has been working to create a standardized e-travel system for its employees for the last 10 years. The original rationale for the Defense Travel System (DTS) was valid: a streamlined, cost-effective way for DOD to purchase and manage official travel. However, poor execution doomed the project.

DTS began with the creation of a Defense Travel System Program Management Office (DTS PMO), which was tasked with procuring a DOD-wide automated travel system.

In May 1998, DTS PMO competitively awarded a contract estimated to cost $263.7 million for the development of an “e-travel system” to provide every aspect of DOD’s travel management needs from “end to end,” including authorization, ticketing, voucher preparation, and travel reimbursement.

Once a fully functional DTS was developed, the contractor would receive a one-time, fixed price of $20 per DOD user, plus a fee of $5.27 for each trip performed using the system. DTS PMO assumed that all 3.2 million DOD users would be connected to DTS by September 2001.

In late 1998, DTS PMO began testing the system. The initial tests were failures. DTS PMO realized that the envisioned system was more complicated than originally thought and the contractor’s software was far less capable than promised; it needed a major redevelopment. In 2000, DTS PMO began the second batch of testing, yielding no better results. By August 2001, less than one month before DTS was to be deployed at all DOD sites worldwide, it continued to fail its tests and was not ready for use at any DOD site.

Up to this point, DOD had not invested any money into the program because all DTS development costs were to be assumed by the contractor. Payments would only commence upon completion, proof of effectiveness, and operational deployment of the travel system.

But, rather than terminating the DTS contract and competitively procuring a system that actually worked, DOD negotiated an entirely new agreement with the original contractor in 2002, allegedly violating the Competition in Contracting Act of 1984.

The contract was changed to a cost-reimbursable arrangement, whereby the cost risk for development and testing was shifted from the contractor to taxpayers. Worse yet, DOD paid the contractor $53.5 million to cover the retroactive costs incurred during the unsuccessful tests prior to December 2000 and agreed to pay $35 - $50 million annually to continue efforts to develop DTS through September 2006.

In July 2002, DOD’s Inspector General (IG) estimated that DTS costs had grown from $263.7 million to $491.9 million – 87% higher than the original contract amount. He agreed with the DTS PMO that the project would not be concluded until 2006, four years behind schedule. DOD’s IG also criticized the management of DTS, stating that it was being “substantially developed without the requisite requirements, cost, performance, and schedule documents and analyses needed as the foundation for assessing the effectiveness of the system and its return on investment.” The IG noted that the quarterly reports issued by the DTS PMO “did not always appear to report the ‘true state’ of the DTS program.” Finally, he said DTS “remains a program at high risk of not being an effective solution in streamlining the DOD travel management process.”

Some DOD officials contend that DTS is substantially complete, operating at more than 5,000 sites and having processed more than 1 million authorizations and 800,000 vouchers. However, these numbers are misleading. DTS PMO claims that DTS is deployed at a site once one computer is hooked up to the system. The military facility is not required to use DTS nor does every computer need to be programmed to use DTS. In fact, of the 5 million tickets the DOD issues annually, DTS cannot find the lowest available price for approximately 40% of them. Travel agents who have tested DTS found that flights booked by DTS can cost as much as $1,200 more per ticket than applicable fares available to government travelers because DTS software did not alert the traveler or travel agent that a lower priced government fare was available.

It is highly unlikely that a fully functional DTS will be achieved by September 2006. Yet taxpayers continue to fund the program while DTS experiences serious problems. And DOD has not released current figures on the program’s cost to date or projected estimates to complete the system. In July 2002, the DOD IG estimated DTS would cost $491.9 million upon completion. DOD’s Office of Program Analysis and Evaluation stated in December 2002 that a fully deployed DTS would cost $537 million. The most current estimate was released in March 2005. GAO concluded that the “DTS total life cycle cost estimate, including the military service and Defense agencies, is $4.39 billion.” The new estimate means that taxpayers are paying $4.13 billion, or 1,565%, more than the original 1998 figure of $263.7 million.

Taxpayers should not have to pay $4.39 billion for DTS when there are alternative travel systems available for DOD use that have not cost the taxpayers a dime to build. In addition to the continued use of existing travel systems, DOD can purchase e-travel services from two vendors that were awarded contracts by the General Services Administration (GSA): CW Government Travel and EDS. Each of these two vendors provides a web-based system that was developed at their own expense rather than by the taxpayers, demonstrating that DOD did not have to assume all costs and performance risks to develop an e-travel system. Moreover, these GSA contracts are available for DOD use immediately.

The rising costs and questionable performance record of DTS indicate that the investment is not a good deal for taxpayers or the government. Furthermore, other systems are available for DOD’s immediate use that are more cost-effective and user-friendly. The Chocola amendment would suspend funding for DTS, allowing Congress and DOD to determine whether the system is the most cost-effective solution to a stream-lined travel process.

Rep. Chocola Staff Contact: Sarah Anderson, , 225-3915